Commitments and Contingencies

9 Months Ended

Jun. 30, 2021

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

COMMITMENTS AND CONTINGENCIES

In fiscal 2019, a fire, which involved non-hazardous waste materials and caused no injuries, occurred at the warehouse of the wood treatment facility of our subsidiary KMG-Bernuth, Inc (“KMG-Bernuth”), in Tuscaloosa, Alabama, which processes pentachlorophenol (“penta”) for sale to customers in the U.S. and Canada. KMG-Bernuth commenced and completed cleanup with oversight from certain local, state and federal authorities, and we recorded related expense and for disposal of affected inventory in Cost of sales. We recorded $26 of expense during the three and nine months ended June 30, 2021. We recorded $1,688 of expense during the nine months ended June 30, 2020. Although we believe we have completed cleanup efforts related to the fire incident, there are potential other related costs that cannot be reasonably estimated as of this time due to the nature of federally-regulated penta-related requirements. In addition, we continue to work with our insurance carriers on possible recovery of losses and costs related to the fire incident. During the nine months ended June 30, 2021, we received insurance recoveries of $1,076. At this point we cannot reasonably estimate whether we will receive any additional insurance recoveries, or if so, the amount of such recoveries.

Separately, in connection with our acquisition of KMG Chemicals, Inc. (“KMG”) in November 2018, through KMG-Bernuth, we assumed a contingency related to the Star Lake Canal Superfund Site near Beaumont, Texas (“Star Lake”). In 2014, prior to the acquisition of KMG, the United States Environmental Protection Agency (“EPA”) had notified KMG-Bernuth that the EPA considered it to be a potentially responsible party under the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended, in connection with Star Lake. The EPA has estimated that related remediation will cost approximately $22.0 million. KMG-Bernuth and seven other cooperating parties entered into an agreement with the EPA in September 2016 to complete a remedial design of the remediation actions for the site. Although KMG-Bernuth has not conceded liability with respect to Star Lake, a reserve in connection with the remedial design was established, and as of June 30, 2021, the reserve remaining was $204. The remediation work will be performed under a separate future agreement. For more information, refer to Note 20 of “Notes to the Consolidated Financial Statements” included in Item 8 of Part II of our Annual Report on Form 10-K for the fiscal year ended September 30, 2020.

Purchase Obligations

We have $12,918 of contractual commitments through December 2022 under an abrasive particle supply agreement and a contractual commitment of $11,311 through December 2021 to purchase non-water based carrier fluid.